Sioux City Brick & Tile Co. v. Employment Appeal Bd., 88-1778

• Citation: 449 N.W.2d 634
• Decision Date: 20 December 1989
• Docket Number: No. 88-1778,88-1778
• Parties: SIOUX CITY BRICK & TILE CO., Appellee, v. EMPLOYMENT APPEAL BOARD, Appellee, and Edward J. Thompson, Kevin Ruring, Bryan Palmer, Russell Ingalls and David McCarthy, Appellants.
• Court: United States State Supreme Court of Iowa

Page 634

449 N.W.2d 634

SIOUX CITY BRICK & TILE CO., Appellee, v. EMPLOYMENT APPEAL BOARD, Appellee, and Edward J. Thompson, Kevin Ruring, Bryan Palmer, Russell Ingalls and David McCarthy, Appellants.

No. 88-1778.

Supreme Court of Iowa.

Dec. 20, 1989.

Dennis M. McElwain, Sioux City, for appellants.

Blair H. Dewey and William C. Whitten, Des Moines, for appellee Employment Appeal Bd.

Greg A. Naylor and Joseph A. Quinn of Nyemaster, Goode, McLaughlin, Emery & O'Brien, P.C., Des Moines, for appellee Sioux City Brick & Tile Co.

Considered by McGIVERIN, C.J., and HARRIS, LARSON, SCHULTZ and ANDREASEN, JJ.

McGIVERIN, Chief Justice.

Upon judicial review of a decision of the Employment Appeal Board (EAB), the district court reversed the action of the agency. Because we believe the district court erred, we reverse and remand.

I. Background facts and proceedings. Prior to May 1983, Thompson, Ruring, Palmer, Ingalls and McCarthy (the claimants) were employed by Ballou Brick Company, which was then a subsidiary of Sioux City Brick & Tile Company. The two companies merged in January 1987. Because Sioux City Brick & Tile is the successor of Ballou, we will refer to it as the claimants' employer.

The claimants were laid off from their jobs in May 1983. Each claimant subsequently collected unemployment compensation benefits from Job Service of Iowa. The employer's account with Job Service was charged for the cost of the benefits. See Iowa Code § 96.7 (1987). ¹ When the benefits were paid, the claimants were eligible for the benefits under Iowa Code section 96.4 and were not disqualified from receiving them under Iowa Code section 96.5. Subsequently, each claimant was discharged from employment by the employer. The date of discharge varied among the claimants.

Sometime after being laid off, the claimants filed an unfair labor practice complaint against the employer with the National Labor Relations Board (NLRB). The claimants eventually prevailed against the employer on the complaint, and the NLRB issued an order requiring the employer to pay the claimants back pay. The employer and the claimants negotiated a settlement as to the amount of back pay necessary to satisfy the NLRB order as to each claimant, the NLRB approved the settlement, and the employer paid each claimant the agreed upon amount of money. The payments included compensation not only for lost wages, but also for so-called "nonwage" items like insurance benefits, equipment allowances, job search expenses and other fringe benefits lost to the claimants during their lay off from employment.

The employer notified Job Service of these back pay awards and requested that Job Service recover the unemployment compensation benefits paid the claimants. See Iowa Code § 96.3(8). The employer requested that its account with Job Service be credited for the recovery. See 345 Iowa Admin.Code 5.15. Job Service did, in fact, determine that the claimants had been overpaid varying amounts of unemployment compensation benefits, due to their receipt of back pay. In October 1987, Job Service sent separate notice of this determination to each claimant. Citing Iowa Code sections 96.3(7) and 96.3(8), Job Service sought to recover from each claimant the amount of benefits paid that claimant for the weeks for which the claimant had since been awarded back pay. The amount of benefits sought to be recovered varied among the claimants, depending on the overlap between the weeks for which the claimant had collected unemployment compensation benefits and the weeks for which the claimant had been awarded back pay. Each claimant contested the attempted recovery by intra-agency appeal. See generally Iowa Code § 17A.15.

The claimants' contested cases were assigned separate hearing numbers. Because the cases turned on the same facts, the claimants and the employer agreed that all five cases should be consolidated for hearing before the Job Service hearing officer.

At the hearing, the claimants and the employer agreed that the claimants had received unemployment compensation benefits, and that the NLRB had awarded the claimants compensatory back pay. The parties disagreed, however, as to overlap of the unemployment compensation benefits and the back pay awards. The claimants argued that the back pay awards were not exactly duplicative of the unemployment compensation benefits they had received because some of the back pay related to weeks in which they had not claimed unemployment compensation benefits, ² and also because the back pay awards included items of nonwage compensation.

The hearing officer issued a nearly identical, but separate, decision on each claimant's appeal. ³ Analogizing this case to an initial determination of benefits entitlement case under Iowa Code section 96.6(2), the hearing officer ruled that for benefits to be recoverable under section 96.3(8), ⁴ the party seeking to justify recovery of the benefits must establish the facts necessary to support the recovery. The hearing officer ruled that in this case it was the employer's burden to show that the back pay it paid the claimants duplicated the unemployment compensation benefits sought to be recovered. Because the back pay in these cases included some items of nonwage compensation and the employer did not establish what portion of the back pay was so constituted, the hearing officer ruled that the employer had failed to carry its burden. The hearing officer also impliedly ruled that the employer had failed to prove temporal overlap between the unemployment compensation benefits and the back pay awards.

By five separate notices of appeal, the employer timely appealed the decision of the hearing officer in each claimant's contested case to the EAB. See Iowa Code § 10A.601(4). The cases were briefed together. The EAB eventually issued identical, but separate, decisions in the appeal of each claimant's case. The EAB affirmed the decision of the hearing officer and adopted his opinion in each case.

The employer applied for rehearing in all five cases. See Iowa Code § 10A.601(7). The EAB denied the applications by identical, but separate, orders on March 29, 1988.

The employer filed its petition for judicial review of Thompson's contested case on April 27, serving Thompson, his attorney, and the EAB. See Iowa Code §§ 10A.601(7), 17A.19. The petition alleged error in interpreting Iowa Code section 96.3(8), the benefits recovery statute applicable to back pay situations. The claimants other than Thompson were not mentioned anywhere in the petition or its attachments, nor were those claimants served a copy of the petition. Thompson and the EAB timely answered the petition.

On May 18, the employer moved the court for leave to amend its petition for judicial review. By amendment of its petition, the employer sought to incorporate all five contested cases involved in this appeal into one judicial review proceeding. The employer argued that the five contested cases had been consolidated into one, so that its timely filing of a petition for judicial review in Thompson's case adequately preserved its right to judicial review in all five cases.

The claimants and the EAB resisted the employer's motion. They argued that the five contested cases were separate, although consolidated for hearing before the agency, and that because more than thirty days had passed since the EAB's denial of rehearing in all of the cases, the employer's petition for judicial review of the contested cases other than Thompson's was untimely. See Iowa Code §§ 10A.601(7), 17A.19. The claimants and the EAB argued that the district court had no authority to grant a motion for leave to amend the petition for judicial review, where to do so would add new contested cases to the judicial review proceeding after the time for petitioning for judicial review in those cases had passed.

The motion for leave to amend was granted by the court, without explanation, on August 8.

In its decision on the petition for judicial review, the district court first found as a fact--contrary to the finding of the agency--that there was temporal overlap between the unemployment compensation benefits paid the claimants and the NLRB back pay awards. The court did not address the agency's allocation of the burden of proof of recoverability to the employer. The court then held that the EAB had erred in its interpretation of section 96.3(8). The court held that in order to justify recovery under section 96.3(8), it is not necessary for anyone to establish what portion of the back pay award constituted wage, as opposed to nonwage, compensation; both types of compensation are back pay under section 96.3(8). The court reversed the decision of the EAB, and ordered the notices of overpayment reinstated and the employer's account with Job Service credited for the amount of unemployment compensation benefits paid the claimants.

The claimants appealed to this court. See Iowa Code § 17A.20.

II. Judicial review jurisdiction over actions of the Employment Appeal Board. On appeal from a district court judgment in a judicial review proceeding, our task is to determine whether the district court correctly applied the law. Like the district court, we apply the standards of Iowa Code section 17A.19(8) to the agency action. If our conclusions match those of the district court, we affirm; if not, we reverse or modify. Norland v. Iowa Dep't of Job Serv., 412 N.W.2d 904, 908 (Iowa 1987); Iowa Code § 17A.19(8).

The threshold question is whether the district court had authority to review the action of the Employment Appeal Board in the contested cases other than Thompson's. ⁵

A. The agency action at issue. At the outset, we reject the employer's contention that this case involves review of only one, and not five, agency actions. Each of the five claimants separately applied for unemployment compensation benefits. They collected different amounts of benefits for different weeks. They were...